He says: “It remains to be seen whether London will continue to be as attractive if this [proposal] is brought in but it is going to have a negative impact [on the capital’s housing market]. I don’t think it is a good idea.”

The Centre for Economics and Business Research has warned that a bar on non-dom status would cost the UK in the long term.

CEBR associate director Scott Corfe says: “The policy is a bit misguided. From an economics perspective, the key issue is that it won’t raise money in the medium term and, actually, it will probably lose money.

“It takes time for people to relocate and you might get a bit more in the short term but these individuals can relocate themselves to other more favourable tax regimes.

“So a lot of these people will relocate and you will lose revenue because of that.”

Individuals with non-dom status can avoid paying tax on overseas income but must pay a remittance charge of up to £90,000 per year. Labour’s plans would allow ‘genuine’ non-doms who stay in the UK for a short time to retain the tax status.

Institute of Directors director general Simon Walker describes the economics of the plan as “unconvincing”.

He says: “It’s very unclear what additional revenue would be raised but the UK’s international reputation would be put at risk.

“This country has benefited enormously from attracting some of the most successful businesses and entrepreneurs in the world, with the previous Labour government recognising the benefits of an internationally competitive tax system.

“While there may be little public sympathy for those who stand to be affected by reforms to non-dom status, the truth is that these things matter. There is a serious risk that large numbers of the international financial community, who have headquartered themselves in London at least in part because of our tax regime, will now exit the country. Politicians at the height of an election campaign may consider this a price worth paying but we do not.”

However, the move has been hailed by others, including union-backed think-tank the Centre for Labour and Social Studies, which describes it as a step forward for the UK’s tax system.